Is Trump Going Soft On China?

The administration just let a Chinese electronics company that repeatedly violated international sanctions off the hook.
A newsstand with a photo of Donald Trump in Shanghai on April 5.
A newsstand with a photo of Donald Trump in Shanghai on April 5.

The Chinese electronics company, Zhongxing Telecommunications Equipment has an extensive list of wrongdoing that should make it an easy target for an administration that talks tough on China, yet President Donald Trump let it off the hook. He just gave ZTE a clean bill of health after it admitted in court to avoiding sanctions on Iran. The administration assessed ZTE a fine and agreed to reverse Former President Barack Obama’s action that put it on a trade blacklist. That this came the week before the summit with China’s President Xi Jinping can be no coincidence.

If you have never heard of ZTE, these stories will bring you up to speed. ZTE pleaded guilty in court for trying to skirt sanctions on Iran. ZTE also plotted to skirt them for North Korea, Syria, Sudan and Cuba. Congress declared ZTE a national security risk and the company loaded spyware on millions of Android phones that sent data to Beijing.

The guilty plea engineered for ZTE came with a $900 million fine. “Record Plea Deal,” screamed headlines. It sounds tough, but ...

ZTE’s share price climbed 7.4 percent in Hong Kong on the news. More importantly, fining ZTE instead of blocking market access mirrors precisely the Obama administration’s practice of “punishing” big Wall Street banks. Wrongdoing that materially harmed millions of Americans brought fines, not jail. While Goldman Sachs’s $5 billion penalty sounds huge, keep in mind their revenue in 2016 was $37.1 billion. Goldman Sachs bought an indulgence, its managers avoided jail time, and the bank’s operations never missed a beat. So it is with ZTE. ZTE’s revenue was $15.1 billion in 2015.

Trump vowed toughness, but how is this tougher than Obama?

Besides, Beijing would never let ZTE suffer because of $900 million. That is a bargain basement price for helping rogue states tie down America geopolitically. One of the things ZTE does is assist despots to spy on their people. China helps keep Kim Jong Un ensconced in Pyongyang, he bedevils the United States, and the Americans negotiate with Beijing about Pyongyang instead of, say, the South China Sea. Diplomacy 101.

Furthermore, Chinese intelligence would have to be stupid — and they surely are not — to allow a relatively minor sum scuttle an arrangement whereby ZTE turns a profit while bugging millions of American mobile phones.

By 2015, during the middle of a storm over Chinese hacking, ZTE was a sticking point because Congress had declared them a threat to national security. Obama reached an “understanding,” which means he mostly ignored the issue. By 2016 Obama learned his lesson and put ZTE on a blacklist for its sanctions evasion.

Trump came into office wanting to remove ZTE from the blacklist and has now done exactly that. Don’t ever accuse the Trump administration of being unable to accomplish its goals.

Trump vowed toughness, but how is this tougher than Obama?

Chest thumping about forcing China to discipline North Korea; saber-rattling about trade; bold calls for scrapping the “one China” policy; loud criticism of Obama’s feckless South China Sea policy ... all faded to, “Pay a fine, then you may continue spying on Americans and aiding the largest sponsor of radical Islamic terrorism in the world.”

In the run-up to the summit with Xi, Trump has been talking tough: “Well if China is not going to solve North Korea, we will. That is all I am telling you. ... [W]e cannot continue to trade if we are going to have an unfair deal like we have right now. This is an unfair deal.” But when it comes to doing, China has observed a willingness to put a price on America’s security.

View the ZTE sop to Beijing through the prism of Trump’s failure to even try to repeal Obamacare. China no doubt believes that Trump’s campaign promises are hollow. China could be excused for thinking the CliffsNotes for “Art of the Deal,” diplomacy edition, simply reads, “Sound tough; act meek.”

Letting ZTE off the hook now and doing it right before the big Trump/Xi summit sends exactly the wrong message, unless the message Trump wants to send is one of weakness.